By Peter Nurse
Investing.com – The U.S. dollar was largely unchanged in early European trade Monday, as investors weighed up the conflicting forces of dismal economic data and the gradual reopening of the globe’s economy.
At 2:45 AM ET (0645 GMT), the , which tracks the greenback against a basket of six other currencies, stood at 99.785, up 0.02%, while was essentially flat at 1.0843 and pushed 0.1% higher to 1.2420. gained 0.4% to 107.12.
In Europe, shops and hair salons can now reopen in France, the second largest economy in the euro zone, as the country is set to emerge cautiously from one of Europe’s strictest lockdowns on Monday.
Many other European countries, like Denmark, Norway, Spain, Italy and Germany, have also started or are planning to lift lockdown measures, and even the U.K., now the hardest hit country in Europe in terms of deaths, announced tentative plans to lessen social distancing measures. Sterling has risen around 0.5% since Prime Minister Boris Johnson announced the measures on Sunday.
Across the pond, California, Michigan, and Ohio, three of the important states for U.S. manufacturing, have taken steps to allow factories and some businesses to resume work.
Yet the number of U.S. unemployment claims since late March soared above 30 million last week, and Treasury Secretary Steven Mnuchin warned overnight that the U.S. unemployment rate could already have reached 25%, not the 14.7% recorded in Friday’s official employment release for April.
There’s little in terms of important economic releases due Monday on the global agenda, but later this week we will have U.S. data on retail sales and Chinese numbers on industrial production and retail sales.
Attention this week may well turn on the EU Commission proposal on the EU Recovery Fund, with the focus being on the size and funding of the fund given the political difficulties that have surrounded the EU’s response to the Covid-19 crisis.
“We remain doubtful that much stimulus will come from a European program, as the size of the Recovery Fund that the European Commission has been mandated to put in place will remain limited,” said analysts at ING, in a research note.
At the same time, European Central Bank officials talked up the possibility of more stimulus, undeterred by the recent German court ruling which questioned the legality of some of its monetary policy.
Late last week the Governor of the central bank of France, Francois Villeroy de Galhau, made clear that the ECB would likely step up monetary stimulus before long given the deteriorating outlook for inflation and the ECB’s ‘total’ commitment to its inflation mandate.
In remarks to the finance committee of the French National Assembly, he asserted that ‘in the very name of our mandate, we will be able to go further, and we will most likely have to go further’.
ECB board member Isabel Schnabel repeated similar sentiments in an interview with the Italian newspaper La Repubblica.